Estate Planning

Having “The Talk” with Your Kids

generationsLife is full of awkward, yet necessary, conversations with our kids. We talk to our young ones about chores, drugs, dating, peer pressure, homework and more. Yet many of us avoid talking to our adult children about important topics like retirement preparedness, eldercare and estate planning.

Parents approaching retirement might be pleasantly surprised to know their kids expect to help out with finances, caregiving and estate execution, according to the latest Fidelity Family & Finance Study.  In fact, the research reveals adult children often have their parents’ backs. For example, although 93 percent of parents feel it would be unacceptable to become financially dependent on their children, only 30 percent of children feel the same.

In too many cases, however, children are not aware of their parents’ wishes. Although 92 percent of parents expect one of their children will assume the role of executor of the estate, when asked, 27 percent of the kids identified as filling this role didn’t know this. While 72 percent of parents expect one of their children will assume long-term caregiver responsibilities if need be, 40 percent of the kids identified as filling this role were unaware of it. And though 69 percent of parents expect one of their children will help manage their investments and retirement finances, 36 percent of the kids identified as filling this role didn’t know.

Having “The Talk” with your kids… about retirement preparedness, eldercare and estate planning.

Why aren’t these conversations taking place? The study suggests it may be a matter of timing. About one-third of those surveyed believe frank conversations should occur after retirement and when health and finances have become an issue. At that point, however, it may be too late. These conversations should begin taking place before retirement, and certainly well before any challenges arise.

Are you ready to have “the talk” with your children or parents? If you would like help initiating the conversation, talk with your financial planner for suggestions.

 

By |2019-08-14T13:59:56-07:00November 3rd, 2016|Estate Planning, Retirement|

Estate Planning and Your Digital Afterlife

McCann-WEBSerious concerns about our “digital afterlife” have emerged thanks to the rapid rise of social media. When the time comes to settle a deceased person’s estate, digital property is a relatively new and growing problem. This type of “asset” simply did not exist 20 years ago. Estate planning and your digital afterlife now go hand in hand.

Digital property is any digital record you own or control – including financial accounts, email, social media, blogs and digital files like music, movies, books and photos. Access to these is limited by the “terms of service” you agreed to when creating an account or buying a product online. Because of privacy laws, many services don’t allow you to pass account control to others upon your death — even if you include it in your will — creating significant legal and emotional challenges for your family.

On the plus side, some companies and services are understanding of the challenges and taking steps to help ease the problem.

In 2013, Google became one of the first major internet companies to put control of data after death directly into the hands of its users. You can now specify what you’d like to happen to your data after you pass away. You can choose to delete data after a certain time period, or to pass the data (from accounts such as Gmail, cloud storage, YouTube, etc.) to a designated person(s). It’s important to note, however, Google doesn’t allow you to pass control of accounts – just the data.

Last year, Facebook (FB) introduced a new feature that lets you choose a “legacy contact” – someone who can manage the memorialized account after your death. You may choose to give that person permission to download an archive of the photos, posts and profile information shared on FB. The legacy contact will not be able to log in as you or see your private messages. Alternatively, you can request that FB permanently delete your account after death.

Until more service providers follow FB’s and Google’s lead, there are steps you can take to protect digital assets.

  • Find out if your service providers have a way of naming a person who can access digital assets in the event of your death.
  • Back up important items from the cloud into some “tangible” form that can be given to your heir(s).
  • Explain to loved ones today what you would like to happen to your digital accounts upon death.
  • Create a comprehensive record of accounts/passwords. Store it in a safe place, and tell your personal representative how to find it.
  • If you don’t want anyone to have access to your online accounts after your death, do not provide them with access. Make account names/passwords difficult to guess, and inform service providers of your wish to have accounts deleted when you pass away.
By |2019-08-14T13:59:56-07:00September 26th, 2016|Current Affairs, Estate Planning|

Trust Basics and Benefits

Larriva-WEBA living trust is a common estate planning tool that helps express your wishes for your estate while you are alive, as well as when you pass away. One benefit a trust provides is that it is not subject to probate (public records), and thus provides you with some privacy. This aspect can also help minimize costs if there are real estate assets held in multiple states; each state would require a probate filing, adding filing charges and attorney fees to your costs.

Trusts are also helpful in preserving rights to assets for blended families. If you want to assure that your children receive an inheritance, you may wish to craft your trust document to specifically leave a portion of the estate to them. Otherwise, there is nothing to stop your current spouse from receiving 100 percent of the assets and changing his or her plans after you have died.

The main components of a trust consist of the grantor (creator), the trustee to manage the trust, and the named beneficiaries who are entitled to the income and/or assets. You also need to name successor beneficiaries (if you and/or your spouse die), successor trustees to continue to make competent decisions, and any freedoms or restrictions you want afforded. One example is delayed distribution of principal to younger beneficiaries. What could happen if your beneficiary inherits $250,000 or more at age 19? It may be wise to set up the trust to parcel out the funds (e.g. 25 percent at age 23, 25 percent at age 28, and the final 50 percent at age 35), so they can learn the skills to manage significant wealth.

Important last steps are to fund your trust by changing the title of your taxable assets, such as your bank account, real estate, brokerage accounts and mutual funds. Not properly funding a trust is a common estate planning mistake. You can also create a pour-over will, which allows the executor to place any assets into the trust that were accidentally left out.

Finally, it is important to communicate your plan to your loved ones. They will appreciate your diligence, and it can greatly simplify an already difficult time in their lives.

By |2019-08-14T13:59:57-07:00July 22nd, 2016|Estate Planning, Health Care|

Investing in Your Grandchild’s Education

college graduate with grandmotherInvesting in your grandchild’s education is a generous gift that can have a life-long impact, especially as the cost of attending college rises every year. According to data reported in U.S. News Best Colleges rankings from 1995 to 2015, the average in-state tuition and fees at public universities grew nearly 300 percent.

You have a lot of options from which to choose. Some are more complex than others. This short video highlights some of the benefits and potential drawbacks on a few of those options.

It’s important to weigh your options thoughtfully, while also ensuring your personal financial needs are being met and that you’ll have sufficient resources in your retirement. Your financial planner can be a helpful resource and guide as you consider the best option for you and your grandchildren.

Investing in Your Grandchild’s Education

 

Select photos in video courtesy of Stuart Miles, dread design, cool designs, satit_srihin and adamr at freedigitalphotos.net

New Retirement Savings Account Option

Senior Couple Sitting Together at BeachThe U.S. Treasury recently announced the full rollout of myRA, a new retirement savings account designed for people who don’t have access to a retirement savings plan at work or lack other options to save.

It is geared toward small savers. Contribution limit is $5,500 per year ($6,500 if over age 50). The money can stay in the account until it hits a maximum balance of $15,000 or 30-year lifespan, at which time it will be rolled into a Roth IRA.

There is no cost to open a myRA and there are no fees. The account allows savers to safely accumulate savings in government savings bonds until they can transition to a private sector Roth IRA, where they have more investment options and opportunities to continue to grow their savings.

Individuals have been able to open myRA accounts and fund them through payroll deduction since December 2014. Starting November 4, people now also have the option of setting up recurring or one-time contributions to their myRA from a personal account, such as a bank or credit union checking or savings account.

Additionally, myRA account holders now have the option of directing all or part of their federal tax refund to their accounts when they file their taxes.